Microsoft, GoDaddy partner on Office 365 plans for small businesses
Summary: GoDaddy will be offering its small-business customers a choice of three Mirosoft Office 365 plans, including one for $12.49 a month that includes desktop versions of Office. — Microsoft and GoDaddy are extending …
Context & Ripple Effects
Microsoft has been rebuilding Office 365 around small-business price points since adding new packages and pricing tiers in November 2012, but selling subscriptions one customer at a time is expensive for a company whose strength is enterprise deals. The GoDaddy partnership solves the distribution problem by plugging into an existing base of millions of domain registrants — the same audience Microsoft tried to reach directly years ago with Office Live before backtracking on its free-domains offer in 2009.
The story traveled unusually widely on announcement day, picked up by Re/code, The Verge, Engadget, Computerworld, GeekWire, WebProNews and Microsoft's own Office blog alongside the ZDNet original — a signal that channel distribution, not the pricing itself, was the story competitors and resellers were reading.
First-order effects
- GoDaddy's small-business customers can now buy three Office 365 plans straight from their registrar, including a $12.49-a-month tier that bundles desktop Office applications with the subscription.
- Microsoft gains a per-seat sales channel into micro-businesses it does not have to staff itself, while GoDaddy adds recurring subscription revenue on top of domain renewals.
Second-order effects
- Rival web hosts and domain registrars are pushed to strike their own productivity-suite bundles or cede the highest-margin attach point — the moment a customer registers a domain and needs email and documents anyway.
- Pricing power in the small-business office suite shifts partly toward whoever owns the registration relationship, forcing Microsoft to share margin where it previously sold direct.
Third-order effects
- If the registrar-as-reseller model holds, cloud office suites become default add-on SKUs at domain checkout rather than products small businesses shop for separately — consolidating SMB software distribution among the handful of companies that already hold the customer relationship.
- The pattern points toward subscription software being sold as infrastructure, judged less on features than on which bill it arrives attached to.
The trend: Cloud productivity suites are shifting from direct vendor sales to bundled resale through domain registrars and hosting companies that already own the small-business relationship.